Amazon’s Kindle Tablet Will Be The First True Media Tablet

Tomorrow Amazon (NSDQ: AMZN) holds a major launch event and will likely unveil its first tablet, according to TechCrunch named the Kindle Fire. To date, everyone bar Apple (NSDQ: AAPL) has failed with tablet launches. If Amazon mimics Apple then its tablet will fail too. Apple has too many economies of scale, industrial design expertise and supplier relationships for a retail-centric company like Amazon to emulate. Especially, if the Amazon tablet has taken a fast route to market by using the same ODM hardware manufacturer as RIM.

To succeed, Amazon must, and I’m sure will, take a different approach.

The success of the Kindle shows Amazon is prepared to think differently from others and to disrupt its own products – in the Kindle’s case to disrupt the cash cow of print book sales – in order to be innovative and seize early advantage in digital markets. If Amazon’s hardware is undifferentiated and virtually the same as RIM’s PlayBook then Amazon has to differentiate elsewhere with content, experience and business models. Otherwise it will suffer the same fate as RIM’s PlayBook.

Amazon cares little about the post-PC world, unlike Apple and Microsoft (NSDQ: MSFT) who are playing that different game. Instead, Amazon is driven by a post disc and post print world where all media will be digital.

Amazon will build a true media tablet. The first true media tablet. The Kindle tablet will focus on the future of all media – TV, movies, music, books, magazines – to enable Amazon to become the dominant digital media retailer. That is Amazon’s ambition.

On that basis, here are the areas to watch for in Amazon’s tablet product launch and what impact each item will have on the market:

— The extent to which the Kindle tablet’s business model is content-subsidized. Few devices enjoy a lower up front price because of content subsidy. It’s hard to do. Games consoles are the obvious exception but even in that market history is awash with console failures. Nintendo’s 3DS is the most recent struggler. Outside of games almost all devices are priced without a content subsidy. Even Apple sees content revenues as icing rather than a key profit centre that would warrant a lower up front price for iPads or iPhones. Carriers too subsidise iPhones based on communication revenues, not media. Arguably, only Amazon’s own Kindle eReader has extended a content-led device sales model outside of the games market. If Amazon offers its tablet for a very low price, based on expectations of future content sales, then Amazon will successfully disrupt the market and enjoy very significant sales. If the price is tied to hardware costs, then the price will be less aggressive and Amazon’s tablet will compete at a similar price to rivals and consumers will judge it based on the overall product package.

— The extent of the app catalogue available at launch and soon afterwards. If the tablet is based on Android 2.x then it should be compatible with most existing Android smartphone apps, but ironically won’t work with the tablet interface-optimized Honeycomb Android apps. But there’s not many of those, so that won’t matter for now. Additionally, app creators will need to submit their apps to Amazon’s app store and accept Amazon’s terms. This is not a given. Amazon’s control over app pricing has upset some app creators. (See app developer bit hack’s views or the letter from the International Game Developers Association.

— The type of colour screen used: LCD or Mirasol / eInk. If Amazon uses an LCD, like PC notebooks and the iPad, then the device will be highly suited for video playback but have poor daylight visibility. This means there will be a continuing need for existing eInk Kindles that work well outside and are super light due to their need for only a small battery. Amazon will likely position its tablet as a complement and attempt to sell cross sell tablets and traditional Kindles. If Qualcomm Mirasol or a colour eInk screen is included then the tablet will be more eReader than iPad and be positioned as a replacement device to existing Kindles. This is much less likely due to both the state of that screen technology and to Amazon’s desire to establish a strong video on demand service.

— Whether there is any business relationship with Google, for example the inclusion of Google apps like Gmail or Maps. Leaks suggest the Amazon tablet is based upon Android v2 – not the 3.x Honeycomb version which underpins Android tablets such as the Motorola Xoom or Samsung Galaxy 10.1 – and lacks any of Google’s proprietary apps. Amazon would not be the first tablet maker to ship hardware with no access to Google’s app store. But existing firms that have done that – Archos, Viewsonic and numerous no-name brands – are too small to worry Google… unlike Amazon. If the Kindle tablet embarks on this path of using Android but offering no upside to Google by supporting Google’s own businesses such as maps, advertising, search, docs, Gmail then expect Google to continue to take greater control over Android. Already, the Honeycomb source code is not publicly available, unlike older versions, which means hardware makers need to work with Google to ship devices that use Honeycomb and are unable to go it alone. In this scenario, Google will likely take the same approach with Ice Cream and other future Android updates and Android will become less and less open.

— The role for new visual eBook and magazine formats. With a colour screen Amazon is no longer limited to simple text and black & white illustrations. Will Amazon now release full format eBooks to replace or complement existing Kindle editions? Will existing eBook buyers have to buy again to enjoy new editions? How will Amazon manage compatibility between current low res black and white eInk Kindles and the tablet? Lots to watch for here.

— Type of connectivity, 3G / WiFi, and route to market. If Amazon ships a purely WiFi-based tablet then its route to market will be simple retail. But Whispersync will be less effective due to the sporadic connectivity as Kindle tablet owners move outside of WiFi network range and so the tablet’s role as a complementary device will be hurt. Despite that minor issue, this is by far the most straightforward option for Amazon.

— If Amazon offers Kindle tablet with an embedded 3G mobile radio: as it does for the Kindle 3 and Apple does with the iPad – then Amazon will have a dilemma of how to price and package mobile data. I’d be very surprised if Amazon was able to emulate the Kindle 3‐²s data model: a mobile data cost that is hidden from Kindle owners in a slightly higher one-off up front device purchase price. The additional data that on demand movies and a cloud-centric music service require will make this too costly and difficult. If there is a 3G model, Amazon will likely emulate the iPad, with pay as you go data pricing or traditional carrier contracts. I see little advantage for Amazon with that approach, so again, a WiFi-model is the most likely design but is also the least exciting.

— Communication features: will the Kindle tablet have a camera for video chat or an email app? If it lacks either, it re-enforces that Amazon is not choosing to go head to head with Apple. This is a media tablet first and only, unlike the iPad which Apple is positioning as the future successor to the PC in a post-PC world. Amazon’s vision is not about the future of computing. It’s delivering the future of media and media retailing.

After the launch event, I’ll loop back here and update this post.

Please comment below if I’ve missed something or you disagree (or even if you think I’m 100% on target!).

Ian Fogg is a mobile industry analyst, consultant and product manager. He’s a former principal at Forrester Research, research director at Jupiter Research and had previous done marketing and/or product management at Psion, 3/Hutchison and Cable & Wireless Communications. He can be followed on Twitter @ianfogg42. .